Overview
- IBM shares fell 13% on Feb. 23 to $223.35 in their worst one-day drop in over 25 years, leaving the stock down roughly 27%–28% for the month.
- The selloff followed Anthropic’s claim that Claude Code can speed COBOL modernization, suggesting legacy projects could move from years to quarters.
- IBM pushed back, with senior vice president Rob Thomas arguing the mainframe’s value lies in its integrated platform and not COBOL translation, and pointing to watsonx Code Assistant for Z, available since Q4 2023, which converts COBOL to Java and aids modernization.
- UBS upgraded IBM to Neutral with a $236 target, saying disruption risk to the Z platform looks largely priced in, while Jefferies kept a Buy and a $370 target and other firms maintained largely Buy/Hold views with average targets near $330.
- Recent results and cash returns underpin the defense: IBM beat Q4 estimates with $4.52 EPS on $19.69 billion revenue, guided 2026 free cash flow to about $15.7 billion, and declared a $1.68 quarterly dividend.